Hi 🙂 Today's post is about the six facts you can get from your China supplier's AIC record.

The China AIC (Administration for Industry and Commerce) record can be very useful when trying to verify that a potential supplier is who they say they are. This goes a long way to reducing and managing your risk when scaling your Amazon hustle.

If you are serious about sourcing from China, you may have considered verifying your business partner. But, we get it, maybe you are not sure about how to verify certain details.

We have been verifying China Companies for over a decade, including tons of experience with the Fortune 500. In this post, we share some tips and tricks.

Who Are We?

China Verification is a service for finding and verifying China suppliers. We have verified hundreds of Chinese companies.

Depending on how deep you go with your verification process, you may find yourself looking at and even trying to read Chinese!

Today's shows you six key facts you can get from China supplier’s AIC Record.

1. The Registered Capital and Actual Paid-up Capital

Registered Capital!

Registered capital is an important part of establishing a company in China. Whether it's domestically owned or a Wholly Foreign Owned Entity (WFOE), every China company must disclose its registered capital.

Generally speaking, registered capital of a company shows the strength or capacity of a company to a certain extent. It’s used as a reference for other companies to choose their partners or for banks to evaluate loan applications.

Company Law of PRC states that registered capital is the fund that all shareholders contribute to the company. This fund can, however, be increased after the company is established. Even more importantly the company’s registered capital can also be decreased!

IF the management of your China partner has decided to take the cash out of the business, that is probably something you want to know - right? Good news is that if they do that they are supposed file a change of registered capital with local AIC.

2. The Company’s Operating Period

A China companies’ operating period "营业期限" (yíngyè qíxiàn) usually includes by two dates .

Sometimes only the date of incorporation is specified because the operating period is open-ended. More on that later.

In most cases though, the operating period includes two dates (date of incorporation and expiry date) . This is shown in the screenshot below with separation via the character "至":

A China company's operating period may be open-ended, meaning no specific expiry date is specified. More typically , a China company will be registered for a specific period, which you can find on their AIC record.

You might want to know if the operating period is about to end, right?

It is not uncommon for the company to be liquidated just before the operating period ends.

In theory, the company could even be dissolved by the authorities if the operating period has lapsed.

3. The Shareholders

China companies are goves by a patchwork of laws and regulations that includes rules for shareholders.

In theory, all China companies must reveal the details of their owners, ie the shareholders. Of course, in practice there are ways to hide the identity of the shareholders. But, in most cases, if you look at the AIC Record you will be able to see who owns the company you are dealing with

The AIC report is the first place to look for info about who actually owns your China partner. 

4. The Business Scope

The intended scope of a business in China must be defined in advance of the business' foundation. It is an enumeration of the trading and commercial activities in which a business is authorized to operate.

It is imperative that the company operations for foreign businesses must be reflected correctly and accurately in the business scope.

The legal risk of disingenuously operating in an unregistered domain, not keeping the company's commercial performance within the range of activities set out in its registered business scope can also be damaging to a company's ability to issue official invoices to its clients.

5. The Annual Returns

All companies registered in Mainland China are required to lodge an annual return to the State Administration of Taxation (SAT) to report their business finances and actualities.

You can obtain a Chinese annual return from the AIC record.

(Note that each company remains responsible for the validity and legality of the information it provides on its Chinese annual return, and not the AIC system.)

The first point relating to the annual

The annual return contains a wide range of data, as set out below.

* Basic Information

6. The Business status

Doing business with a China company and making some investigations will help you make sure that this company really exists. That way you can be more confident that they will really deliver

If you do business with companies in China that turns out to be canceled or revoked, that is a red flag.

In order to avoid that kind of thing, it pays to verify the company’s status.

In China, company registration status is divided into eight types:

In China, only running (存续、在业 or existing/in operation) companies are permitted to run a business. So, doing business with a Chinese company, you should make sure it is still in operation.

What’s Next?

Guys 🙂 I hope you found today's post to be of assistance.

Like you know, we are serious and passionate about assisting hardworking entrepreneurs. If you think you want our help - drop a message, and we can set up a call to discuss.